GRANDE FINALE PROBLEM SOLVING SESSION

FINANCIAL ACCOUNTING

SET 2

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 QUESTION 1
For each of the statements below, choose the most correct answer among the four given alternatives.
Indicate your answer by writing the appropriate letter A, B, C or D in your answer booklet(s).

(i) The balance on the payables ledger control account should be equal to which other figure in the
accounting system?
A. The total of the balances on the individual customers’ accounts.
B. The total of the balances on the individual suppliers’ accounts.
C. The unreconciled balance on the receivables ledger control account.
D. The balance on the receivables ledger control account reconciled for items in transit.

(ii) Which of the following errors would be found by extracting a trial balance?
A. A transaction has been completely missed in the accounts.
B. The double entries have been made the wrong way round.
C. Different figures have been entered for the debit and credit entries.
D. An expense item has been posted to a non-current asset account.

(iii) Which of the following are valid reasons for keeping a receivables ledger control account?
1. To obtain a figure for receivables to be included in the statement of financial position.
2. To assist in the location of errors.
3. To check the accuracy of entries made in personal accounts.
A. 1 and 2 only
B. 2 and 3 only
C. 1, 2 and 3
D. 1 and 3 only

(vi) A credit entry into a ledger account can represent which of the following?
A. Increase in an expense
B. Increase in income
C. Increase in an asset
D. Increase in drawings

(v) Angela’s cash book shows TZS.2,030,000 is overdrawn. A bank reconciliation however, shows that a
standing order payment for TZS.365,000 had been entered in the cash book twice, and that a
dishonoured customer’s cheque for TZS.275,000 had been debited in the cash book rather than been
credited.
What is Angela’s overdraft position?
A. TZS.1,845,000
B. TZS.1,940,000
C. TZS.2,120,000
D. TZS.2,215,000

(vi) Which of the following errors will require an entry to a suspense account to correct it?
A. A credit purchase was completely omitted from the accounting records.
B. A credit sale was recorded as a cash sale.
C. The payment of wages was debited to the rent account instead of the wages account.
D. The cash sale was recorded correctly in the sales account and credited in the bank account.

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(vii) Richaa has a balance of TZS.350,000 on his payables ledger control account at the end of May 2016.
What does this mean?
A. He has bought TZS.350,000 of goods in May 2016.
B. He is owed TZS.350,000 by his customers.
C. He owes TZS.350,000 to his suppliers.
D. He has paid TZS.350,000 to his suppliers in May 2016.

(viii) The following ledger balances make up a company’s trial balance:

TZS.
Sales 76,700,000
Purchases 26,800,000
Non-current assets 31,400,000
Payables 18,200,000
Receivables 32,300,000
Cash at bank 14,200,000
Capital 9,800,000
What is the total of the debit column of the trial balance?
A. TZS.94,900,000
B. TZS.104,700,000
C. TZS.105,900,000
D. TZS.209,400,000

(ix) Yustina has a bank balance of TZS.550,000 at the start of the week. During the week the following
transactions occurred:
1. Day 1 she sold goods on credit for TZS.876,000.
2. Day 2 she received a cheque for TZS.400,000 from a credit customer.
3. Day 3 she purchased office equipment with a list price of TZS.1,000,000 but receives a 10%
discount for paying immediately by cheque.
How much does Yustina have in the bank at the end of the week?
A. TZS.2,826,000
B. TZS.400,000.
C. TZS.50,000.
D. TZS.126,000

(x) If Pamee Plc reduces its allowance for uncollectible receivables by TZS.300,000, which of the
following statements is correct?
A. Current assets decrease by TZS.300,000
B. Current liabilities decrease by TZS.300,000
C. Gross profit increases by TZS.300,000
D. Profit increases by TZS.300,000

(xi) Which of the following should be accounted for as capital expenditure?

A. The annual cost of painting a factory floor.
B. The repair of a window in a building.
C. The purchase of a vehicle by a garage for re-sale.
D. Legal fees incurred on the purchase of a building.

(xii) The capital of a sole trader would change as a result of:

A. A credit customer paying by cheque.
B. Raw materials being purchased on credit.
C. Non-current assets being purchased on credit.
D. Car petrol for personal use by the owner being paid for out of the business’ petty cash.
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QUESTION 2
The following trial balance was extracted from the books of Wajama Manyerere Ltd as on
31st December 2008
Trial Balance, 31st December 2008
ACCOUNT NAMES DR CR
Land 400,000,000 -
Motor vehicles 132,000,000 -
Provision for depreciation of M Vehicle - 36,000,000
Furniture 78,000,000 -
Provision for depreciation of Furniture - 8,300,000
Inventory on 1 January 2008
st 14,000,000 -
Accounts Receivable/Payable 20,000,000 18,000,000
Cash and Bank balance 50,000,000 -
Goodwill at cost 10,100,000 -
Profit and loss account 31st December 2007 91,700,000
Ordinary shares of tshs1,000 - 300,000,000
General reserve 39,400,000
12% Debentures (five years from 1 April
st - 50,000,000
2008)
Revaluation reserve 21,000,000
Share premium 12,000,000
Sales - 875,000,000
purchases 565,000,000 -
Carriage inward 2,960,000 -
Rent 15,000,000
Rates 17,000,000
Electricity and water 3,960,000 -
Commission received 3,600,000
Directors’ remuneration 29,980,000 -
Provision for doubtful debt on 1 January
st - 3,000,000
2008
Salaries and wages 108,000,000 -
Interim ordinary dividend paid 17,000,000
Insurance 25,000,000
1,445,000,000 1,445,000,000
Additional information
a. Inventory as at 31 December 2008 is tshs17,000,000. This includes tshs9,000,000 which
relates to the cost of inventory damaged in November 2008, which can be repaired at a
cost of £1,000,000 and which can then be sold for tshs6,000,000.
b. All of the general expenses in the trial balance are to be split evenly between
Administrative Expenses and Distribution Costs.
c. Rates was paid on 1 January 2008 to cover 15 months from that date
d. Tshs. 9,000,000 of insurance was paid on 1 April 2008 to cover a year from that date
e. One room of the premises is sublet at an annual rental of TAS. 20,000,000. At the year
end the tenant owes three months rent.

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f. Commission received to cover the year ended 31 May 2009.
g. debenture Interest is paid every 1st January each year
h. Provision for doubtful debt is to be increased by shs. 1,000,0000 to shs. 4,000,000
i. Depreciation is charged as follows
i. Motor vehicles 10% on straight line method
ii. Furniture 20% on reducing balance method
j. Charge Corporate tax of 30%
k. Transfer shs 3,000,000 to general reserve
l. Manyerere revalued land to TZS.450,000,000 as at 30th June, 2016 but no entries have
already been passed.
m. The company issued 50,000 ordinary shares at a price of shs1,300
REQUIRED
a. Statement of Profit or loss for the year ended 31st December 2008
b. Statement of changes in equity
c. Statement of financial position as at 31st December 2008

QUESTION 3
At 1 October 2021 the financial position of Juve’s business was:
TSHS
Cash in hand 5,120,000
Balance at bank 3,100,000
Debtor – Ethan 1,400,000
Creditor – Malebo 1,150,000
Transactions during the month of October
1. goods bought in cash shs 700,000
2. paid rent in cash shs 100,000
3. cash sales shs 1,200,000
4. Goods bought on credit from Malebo shs 1,300,000
5 sold goods on credit to Ethan shs 1,600,000
6. Goods returned to Malebo shs 200,000
7 goods returned by ethan shs 300,000
16 Ethan paid us in cash in full settlement of shs 800,000 deducting 5% cash discount
24. we paid Malebo by cheque in full settlement of shs 500,000 deducting 3% cash discount
28 withdrew cash from bank for business use shs 400,000
29 bought fixtures by cheque shs 600,000
30 cash taken by the owner for his private use shs 250,000
31. Neema lent us shs 2,000,000 paying by cheque
REQUIRED
a) Enter the above transactions in Juve’s three columns cash book. Balance the cash
book at 31st October 2021 and bring down the balances on 1st November 2021
b) Also Write up Ethan Account and Malebo account

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Question 4
Mugisha has the following transactions for the month of May 2007
2007 May
1. Bought on credit from Hussein 10 radios at shs 60,000 each, 13 music centres at shs
320,000 each. Less 25% trade discount.
4. Sold on credit to Rukwembe 4 radios at shs 100,000 each, 5 music centres at shs
400,000
each. Less 20% trade discount.
7. bought from Mokiri 8 washing machines at shs 400,000 each, 10 vacuum cleaners at
shs 60,000 each, 5 dishwashers at shs 300,000 each
8. sold to Mudi 3 washing machines at shs 600,000 each, 5 vacuum cleaners at shs
200,000 each, 2 dishwashers at shs 420,000 each.
15. returned to Mokiri 1 washing amchine and 3 vacuum cleaner.
16. Mudi returned 2 washing machines and 2 dishwashers.
25. Bought from Remi 12 radios at shs 140,000 each, and 8 TVs at shs 600,000 each.
26. Sold to Yona 3 radios posts at shs 240,000 each, and 5 TVs at shs 840,000 each.
29. returned to Remi 3 radios and 2 TVs.
30. Yona returned 2 radio and 2 TVs.
REQUIRED
Enter these transactions in Malilo’s
a) sales journal
b) purchases Journal
c) sales return journal
d) purchases return journal

QUESTION 5
The following is the bank statement of Massawe for the month of December, 2000
Bank statement
Date Details Dr Cr Balance
1/12/2000 Balance b/d 4,000DR
5/12/2000 Muna and Co. 1,000 ?
10/12/2000 Cheque 2,200 ?
15/12/2000 Pesambili 2,500 ?
18/12/2000 Bank charges 1,300 ?
20/12/2000 Dividends 1,500 ?
25/12/2000 Standing order 500 ?
30/12/2000 Credit transfer 3,000 ?
31/12/2000 Cheques 600 ?
Additional information
i) Cash book opening balance 1st December 2000 was shs4,000 CR balance
ii) Deposits in transit at 31st December 2000 – Mashaka shs1,200
iii) Outstanding cheques – Matata shs3,500
REQUIRED
a) Fill the gaps on balance column of bank statement
b) Prepare Un-adjusted cash book
c) Prepare Adjusted cash book
d) Prepare Bank reconciliation statement starting with adjusted cash book balance